The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #511 - Trading In Your Sleep

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May 31 · Issue #511 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Trading In Your Sleep
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. China “Airdropping” CBDC
  5. Argentines Turn To Bitcoin
  6. India Consults The Enemy
  7. The Wolf Of All Streets Podcast Ft. Miss Teen Crypto
  8. My Recommended Platforms And Tools
Trading In Your Sleep
I make my best trades in my sleep.
I have always found that my best trades come in two varieties. First are the ones that I plan long in advance and wait patiently for, looking at large time frames and choosing macro levels to attack. Second are the trades where I place “impossible” low ball or “stink bids” way below price that I assume will never fill. These occasionally get caught on an errant wick.
I often tell the story of March 12th, 2020, but will share it again for those that have not heard it.
March 12th was the day that crypto “died.” Price was trading around $6,000, after a massive drop already that day from $8,000. Price was above $10,000 just days before, but the COVID news was setting in and markets were reacting.
I had already filled bids on the way down for my long term holdings, but set some orders at $4,000 before going to sleep, assuming they would never fill.
When I woke up the next day, price was still trading around $6,000. I thought little of it, went about my morning dealing with the kids and finally settled in at my computer. That’s when I noticed that price had dropped to around $3,800, largely a result of Bitmex’s inefficient liquidation engine firing automatic sell orders into an empty order book. Price probably “should” have stopped around $6,000 that day, but Bitmex forced price much lower before they went into “unscheduled maintenance.”
It was at that point that I realized I had filled my $4,000 spot order and was up 50% on Bitcoin in a matter of hours. I sold half of those coins immediately to lock in a sizable profit in the depth of a bear market and am holding the rest to this day.
Price often goes lower than we expect in a bear market and higher than we expect in a bull market. As a result, I have made it a practice to always have low ball bids in place, just in case.
Staring at a chart all day is more likely to make you overanalyze small time frames, causing you to miss the big picture and the best trades. Make a plan, close the chart and let the market come to you.
Added bonus - you’ll have a lot more free time!
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin had a good day, not something that we have become accustomed to saying. Hopefully we will be saying it again soon, but we are still at a point where we need to be extremely cautious and skeptical.
The good news is that we had a beautiful breakout on respectable volume, especially considering there was a holiday in the US and markets were closed.
That said, this is still sideways chop for now. Price really needs to break above $33,000 to start making any sort of real bullish case.
33K is a key weekly and daily level (hell, even monthly), as it was the eventual “bottom” of the drop that started at the tail end of 2021. This is THE level for now.
You can see the strong build of bullish divergence that I was talking about for weeks, finally playing out and pushing price upward. This move also sent RSI above 50, which is considered a move from bearish to bullish in general. You can see RSI attempting to retest 50. That said, it did not break far above, so you could see this area as resistance.
More importantly, the close above $31,295 invalidated any hidden bearish divergence. We will eventually see RSI push to overbought once again, but that can take quite a bit of time.
4-HOUR CHART
This move exhausted oscillators on lower time frames. As you can see, 4-hour RSI is massively overbought hitting around 82 before retracing some. Another push higher would likely give bearish divergence, so I think bulls actually want to see price cool off and consolidate, bring RSI down for a bit before attempting another push.
You can see that Bitcoin broke out of the local range and also above the highs that temporarily broke the range previously. This line at $31,460 and the top of the red range would be likely places for throw back retests if you are still bullish and looking for an entry.
Again, I would proceed with caution, but this is a time to at least feel good about the price action in the short term.
Legacy Markets
Asia Stocks Seen Steady Amid Inflation Worries: Markets Wrap - Bloomberg
Bitcoin enjoyed a bullish weekend while markets in the US were closed. Well, they are opening again and things are looking a bit shaky. Euro-zon inflation hit new highs, Brent crude is above $120 a barrel and the EU is putting a partial ban on Russian oil.
“President Joe Biden will hold a rare Oval office meeting on Tuesday with Fed Chair Jerome Powell amid the highest inflation in decades and ahead of US payroll numbers later this week.”
This is going to be an interesting few days.
Here are some key events to watch this week:
  • Euro zone CPI Tuesday
  • The Federal Reserve is set to start shrinking its $8.9 trillion balance sheet Wednesday
  • The Fed releases its Beige Book report on regional economic conditions Wednesday
  • New York Fed President John Williams, St. Louis Fed President James Bullard speak at separate events Wednesday
  • OPEC+ virtual meeting Wednesday
  • Cleveland Fed President Loretta Mester discusses the economic outlook Thursday
  • US May employment report Friday
  • The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday
Some of the main moves in markets:
Stocks
  • The Stoxx Europe 600 fell 0.3% as of 10:17 a.m. London time
  • Futures on the S&P 500 fell 0.3%
  • Futures on the Nasdaq 100 fell 0.2%
  • Futures on the Dow Jones Industrial Average fell 0.3%
  • The MSCI Asia Pacific Index rose 0.4%
  • The MSCI Emerging Markets Index rose 1.1%
Currencies
  • The Bloomberg Dollar Spot Index rose 0.3%
  • The euro fell 0.4% to $1.0733
  • The Japanese yen fell 0.3% to 127.96 per dollar
  • The offshore yuan was little changed at 6.6701 per dollar
  • The British pound fell 0.3% to $1.2614
Bonds
  • The yield on 10-year Treasuries advanced nine basis points to 2.83%
  • Germany’s 10-year yield advanced three basis points to 1.08%
  • Britain’s 10-year yield advanced three basis points to 2.02%
Commodities
  • Brent crude rose 2% to $124.06 a barrel
  • Spot gold fell 0.1% to $1,852.53 an ounce
China "Airdropping" CBDC
China to Airdrop $4.5 Million in e-CNY to Shenzhen Residents to Bolster Local Economy
Central Bank Digital Currencies are exceptional for quick printing and distribution of fiat - effectively an airdrop. China is giving away 30 million Yuan to residents of Shenzhen to help bolster the economy in the midst of lockdowns.
Digital fiat is inevitable. And so is a massive violation of your privacy.
Argentines Turn To Bitcoin
Argentines turn to Bitcoin amid inflation worries: Report
Bitcoin adoption is inevitable in countries with hyper inflation… and so is the usage of stablecoins, which allow citizens to access dollars, otherwise only available in small quantities or on the black market.
Argentina’s economic woes create the perfect breeding ground for crypto adoption. Notably, the IMF recently forced Argentina to end all government level adoption of crypto as a stipulation for their predatory loan. But where there’s a will there’s a way. And the people always find a way.
India Consults The Enemy
India to Finalize Crypto Consultation Paper With IMF, World Bank Input - Blockworks
Ouch.
This is like a bunch of kids consulting with their parents on the best way to sneak out and smoke cigarettes after the parents go to sleep.
Crypto is the biggest threat to the IMF and World Bank. Look at how they are treating El Salvador and Argentina, where they have made it explicitly clear that loans are dependent on a wholesale ban of crypto.
India has vacillated wildly on their crypto policies - working with the IMF to set a framework is a step in the wrong direction.
The Wolf Of All Streets Podcast Ft. Miss Teen Crypto
Podcast - The Wolf of All Streets
This teen is on a mission to make crypto mainstream by educating Gen Z on its benefits. At just 13 years old (and with $200 in her bank account) she was smart enough to know that keeping it in her savings account wasn’t enough. Now, at 16 years old, she’s amassed a combined 73.2k followers on Twitter and Instagram as Miss Teen Crypto, where she’s well-known for asking strangers on the streets what they know about Crypto (and teaching them what they don’t). On this episode we learn how a shopping spree got Randy hooked on Crypto, discuss the barriers that are still holding teenagers back, and hear from Randy herself on the best ways for our young generation to get started.
WE discussed:
  • Randy’s path into Crypto
  • Why she’s holding on
  • Inspiring the younger generation
  • Barrier to entry
  • How teenagers can get started
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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